December 5, 2023

Ola, an Indian ride-hailing startup, has seen its valuation slashed by its backer, Vanguard, as a weak global economy weighs heavily on the market capitalization of many listed companies.

Vanguard slashed the valuation of Ola holding company Ani Technologies by 35% by the end of February, the company disclosed in its semi-annual report to investors. The US index fund pioneer cut its stake in Ola to $33.8 million from a purchase price of $51.7 million, according to an analysis of its filings.

During the same period, Vanguard’s Growth Fund reported an increase in the value of its investments in India’s Housing Development Finance Corp and L&T holdings, while its HDFC Bank shares fell modestly in value.

Vanguard’s latest valuation of Ola stock lowered the Indian ride-hailing startup’s market capitalization to about $4.8 billion from $7.3 billion at the end of 2021. Ola was valued at $5.7 billion in a private funding round in January 2019.

An Ola spokesman declined to comment.

The Bengaluru-based company joins a growing list of high-profile Indian startups whose valuations have been slashed by investors. In January, Invesco nearly halved Swiggy’s valuation to $5.5 billion, while BlackRock slashed Byju’s valuation by nearly half to $11.5 billion the year before.

Recent valuation cuts shed light on the impact of deteriorating global market conditions on Indian startups. Fundraising activity within the Indian start-up ecosystem has declined in the last year, but valuations of many large start-ups have remained unchanged as they have either raised capital via convertible notes (thus delaying price discovery) or opted not to raise capital at all .

Notably, investors use a variety of methods to value the equity of their existing venture portfolios. As a result, significant valuation adjustments by individual investors may not necessarily reflect the views of other investors and, in some cases, even of the startup itself.